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15 Reasons To Move Finance To The Cloud, Now

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Trailblazers though they were, finance departments have
quickly become technology laggards. How did this happen?
Believe it or not, corporate finance was once in the vanguard
of technology adoption.

Publicado en: Tecnología
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15 Reasons To Move Finance To The Cloud, Now

  1. 1. 1 15 RE A SONS TO MOVE FINANCE TO THE CLOUD, NOW 15 Reasons To Move Finance To The Cloud, Now BY KAREN DELA TORRE VICE PRESIDENT, APPLICATIONS BUSINESS GROUP, ORACLE By the end of the middle of the 1990s, nearly every large organization had some form of enterprise resource planning (ERP) system in place; even small and midsize companies relied on finance or accounting software installed on their desktop PCs. Trailblazers though they were, finance departments have quickly become technology laggards. How did this happen? Believe it or not, corporate finance was once in the vanguard of technology adoption.
  2. 2. 2 15 RE A SONS TO MOVE FINANCE TO THE CLOUD, NOW Why? Because the global economy had reached a tipping point where the risk of doing nothing was greater than the risk of change. As business needs changed, however, the systems had to change, too. Most often, this involved rewriting the application’s source code. According to a 2014 survey from Panorama Consulting Solutions, 90% of ERP users have incorporated some level of customization into their systems. And with customization came complexity, cost, and an inability to easily change direction. With the advent of the web and the Y2K bug, many companies upgraded their on-premises ERP systems—and, quite frankly, they found it painful. All of their custom-coded changes disappeared and had to be reprogrammed. This involved hiring teams of developers from consulting firms, spending a lot of money, and then waiting 18–24 months for the newsystem to come online. Understandably, many finance executives are reluctant to embark upon this level of disruption again. Their 10- or 20-year-old systems might be slow and clunky, and reference a chart of accounts that is laughably out of date, but employees can limp along with what they have, using manual workarounds, spreadsheets, and Post-it notes to get the job done. Employees can be persuaded to wait for change. The business world, however, cannot. THE RETURN OF THE TIPPING POINT We have once again reached a tipping point where seismic market shifts—led by the emergence of the digital economy—are outpacing most companies’ ability to respond. It’s time for finance to take the lead, once again. Today’s competitive landscape means that the risk of doing nothing is once again high. Companies that stick with the old ways of doing business run the risk of being disrupted by new, digitally enabled businesses, of losing the best talent, and of being outmaneuvered by more nimble competitors. The need today is not just to automate the finance function, but to digitize it; not just to focus on operational efficiency, but on operational velocity. And this is driving more and more CFOs to look to the cloud. Among the business drivers we see most often, the reasons for moving finance to the cloud fall into three broad categories: The need today is not just to automate the finance function, but to digitize it; not just to focus on operational efficiency, but on operational velocity. DIGITAL TRANSFORMATION 1. OPERATING MODEL SHIFT With the digital revolution has come a surge in new business models: the sharing economy (Uber, Airbnb), the digitization of products (Apple, Netflix), and the social explosion (Facebook, Snapchat), to name a few. New business models require new key performance indicators, data modeling, customer support, sentiment analysis, mobile purchasing, and countless other back-office functions. Legacy ERP systems were simply not designed to support these new business models—or even to enable rapid change to existing ones. 2. SUBSCRIPTION BILLING A gaming provider, for example, might move from selling games on CD to streaming them over the internet for a monthly fee. This would require new billing and collections functionality to support a subscription-based model. 3. MOBILE ENABLEMENT AND SOCIAL COLL ABORATION Many of today’s ERP systems predate the digital revolution. Some of them even predate the web. But with the explosion of user-friendly apps on touch-friendly smartphones, today’s employees expect the easy-to-use social collaboration tools at work that they’re accustomed to at home. Employers who don’t provide these run the risk of losing top finance talent.
  3. 3. 3 15 RE A SONS TO MOVE FINANCE TO THE CLOUD, NOW 4. REVENUE MANAGEMENT The recent IFRS 15/ASU 2014-09 accounting standard introduces rules to ensure that companies use a consistent method of recognizing revenue from contracts. Especially if your business creates complex sales contracts with multiple and distinct performance obligations (aka deliverables), there will be new calculations to perform and processes to follow. Legacy ERP systems are not optimized to handle the new requirements. CONFIDENT GROWTH 1. GLOBAL EXPANSION If your growth is defined by global expansion, you will experience increased financial complexity with distinct accounting, reporting, and compliance requirements, likely necessitating changes to your existing systems. 2. MERGERS AND ACQUISITIONS Information technology is generally the single biggest cost element in an M&A event, and can be the single biggest enabler of synergies. The heavy reliance on ERP for business operations, management information, and financial reporting, makes it a priority item in the M&A agenda. Organizations that stick with the status quo run the risk of being capsized by digitally enabled competitors. To enable digital transformation, grow the business, and make operations more efficient, businesses are moving finance functions to the cloud. Finance to the Cloud READY FOR DIGITAL TRANSFORMATION Four keys to meeting new customer expectations and business requirements Create new operating models Enable mobile and social collaboration Ensure that contract revenue is recognized according to industry guidelines Embrace new revenue approaches such as subscriptions or streaming services 1 2 3 4 PREPARE FOR CONFIDENT GROWTH Five situations that call for the benefits of the cloud Expanding operations globally Merging with or acquiring companies
  4. 4. 4 15 RE A SONS TO MOVE FINANCE TO THE CLOUD, NOW 3. NEW MARKET ENTRY New markets require understanding new customer needs that drive different back-office support models. 4. SCALE AND HYPER-GROW TH Customer growth requires systems that can keep pace, and the cloud provides scalability that companies will not outgrow, without an oversized up-front investment. 5. GOING PUBLIC If your firm is going public, the right systems and processes must be in place to provide financial transparency, attract investment, and support increased regulatory scrutiny. Finance is at the heart of the business, and any changes made to these systems have ripple effect on the rest of the company. Some finance leaders would rather live with the devil they know than take the risk that something worse might happen. OPERATIONAL EFFICIENCY 1. SUBSIDIARY STRATEGY Companies often have subsidiaries, regional divisions, or recent acquisitions that are using a different ERP system from the head office. This disrupts the flow of data and necessitates manual workarounds such as spreadsheets. Consolidating on the cloud can provide a single view of operations without the cost and lengthy implementations that inhibit on-premises ERP. 2. ON-PREMISES UPGRADE AVOIDANCE Many on-premises ERP systems are facing the end of their lives and require an upgrade— a long project with a substantial investment. The cloud can offer a quicker, more cost-effective alternative to an on-premises upgrade. 3. SHARED-SERVICES INITIATIVE Launching a shared-services model in which your team provides core back-office support to the entire company can be provisioned more easily via the cloud. Enable mobile and social collaboration Embrace new revenue approaches such as subscriptions or streaming services 3 4 PREPARE FOR CONFIDENT GROWTH Five situations that call for the benefits of the cloud 1 2 3 4 5 Expanding operations globally Entering new markets Scaling for growing demand Going through an IPO Merging with or acquiring companies MAKE OPERATIONS EFFICIENT Six ways cloud-based ERP can streamline finance and focus resources on innovation Provide better control and insight into subsidiaries without sacrificing regional needs 1 2 3Avoid the hassles of on-premises upgrades Move to a shared service model Enable mobile and social collaboration Embrace new revenue approaches such as subscriptions or streaming services 3 4 PREPARE FOR CONFIDENT GROWTH Five situations that call for the benefits of the cloud 1 2 3 4 5 Expanding operations globally Entering new markets Scaling for growing demand Going through an IPO Merging with or acquiring companies MAKE OPERATIONS EFFICIENT Six ways cloud-based ERP can streamline finance and focus resources on innovation Provide better control and insight into subsidiaries without sacrificing regional needs 1 2 3Avoid the hassles of on-premises upgrades Move to a shared service model
  5. 5. 5 15 RE A SONS TO MOVE FINANCE TO THE CLOUD, NOW 4. INFRASTRUC TURE INVESTMENT AVOIDANCE Many fast-growing companies soon outgrow their small-business accounting packages and need to move up to something with more capabilities. They look to ERP in the cloud to avoid the purchase of costly hardware and the expense of an internal IT team. 5. MULTI-ERP RATIONALIZ ATION Companies that have, over the years, acquired multiple ERP systems may want to standardize on the cloud using the built-in best practices the software offers. 6. IMPROVED SECURIT Y Understandably, many finance executives are reluctant to trust their confidential finance data to a third party. Yet according to KPMG, large cloud vendors can offer security that “is many times superior to what companies are able to provide themselves, because vendors’ economies of scale allow them to spend much more.” In addition, at least one cloud ERP vendor (Oracle) owns the full stack, so they can manage security from the applications down to the very microprocessors that power the servers. Even with all of the above business drivers, there is resistance. Finance is at the heart of the business, and any changes made to these systems have ripple effects on the rest of the company. Some finance leaders would rather live with the devil they know than take the risk that something worse might happen—something like an 18–24-month replacement project.  Watch: Larry Ellison Answers CFO Questions About Oracle Enterprise Resource Planning Cloud TAKING A PHASED APPROACH TO MITIGATE RISK But the beauty of the cloud is that you don’t have to replace everything at once. You can start in smaller units and build on those over time. Large companies with multiple entities areYou can move all or part of your ERP systems to the cloud, at your own pace and in a way that best matches the needs of your business. As you do, you’ll enjoy up-to-date, modern capabilities without the hassle of lengthy upgrades—which enables your team to focus on innovation instead of maintenance. TAKEAWAY 1 2 3 4 5 Expanding operations globally Entering new markets Scaling for growing demand Going through an IPO Merging with or acquiring companies MAKE OPERATIONS EFFICIENT Six ways cloud-based ERP can streamline finance and focus resources on innovation Provide better control and insight into subsidiaries without sacrificing regional needs 1 2 3 4 5 6 Avoid the hassles of on-premises upgrades Move to a shared service model Reduce infrastruc- ture investment and maintenance Consolidate multiple ERP systems Gain better security without investing resources You can move all or part of your ERP systems to the cloud, at your own pace and in a way that best matches the needs of your business. As you do, you’ll enjoy up-to-date, modern capabilities without the hassle of lengthy upgrades—which enables your team to focus on innovation instead of maintenance. TAKEAWAY 1 2 3 4 5 Expanding operations globally Entering new markets Scaling for growing demand Going through an IPO Merging with or acquiring companies MAKE OPERATIONS EFFICIENT Six ways cloud-based ERP can streamline finance and focus resources on innovation Provide better control and insight into subsidiaries without sacrificing regional needs 1 2 3 4 5 6 Avoid the hassles of on-premises upgrades Move to a shared service model Reduce infrastruc- ture investment and maintenance Consolidate multiple ERP systems Gain better security without investing resources You can move all or part of your ERP systems to the cloud, at your own pace and in a way that best matches the needs of your business. As you do, you’ll enjoy up-to-date, modern capabilities without the hassle of lengthy upgrades—which enables your team to focus on TAKEAWAY 1 2 3 4 5 Expanding operations globally Entering new markets Scaling for growing demand Going through an IPO Merging with or acquiring companies MAKE OPERATIONS EFFICIENT Six ways cloud-based ERP can streamline finance and focus resources on innovation Provide better control and insight into subsidiaries without sacrificing regional needs 1 2 3 4 5 6 Avoid the hassles of on-premises upgrades Move to a shared service model Reduce infrastruc- ture investment and maintenance Consolidate multiple ERP systems Gain better security without investing resources
  6. 6. Copyright © 2016, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners. CONNECT WITH US blogs.oracle.com/oracle facebook.com/oracle twitter.com/oracle oracle.com For more information, visit cloud.oracle.com choosing to migrate finance to the cloud in some of their satellite offices, such as Canada, China, or Mexico. If you want to keep your core ERP on premises, you can move some independent finance applications to the cloud, such as planning and budgeting, narrative reporting, financial reporting compliance, and more. And even if you do make the leap to migrate your core ERP to the cloud, the timelines for such a project can be much shorter than an on-premises replacement. Some customers have made the move in as little as 10 weeks. The cloud is the innovation engine for today’s digital economy. Once in the cloud, lengthy upgrades can become a thing of the past, as up-to-date software is delivered over the internet on a subscription basis. The reasons for making the move are many, but the results are typically the same: faster innovation, greater scale, lower costs, and operational excellence. The question for today’s CFOs is: How much longer can you afford to wait? FIND OUT MORE: • Best Practices for ERP Cloud Migration • The Digital Finance Imperative: Measure and Manage What Matters Next BY K AREN DEL A TORRE V ICE PRE SIDEN T, APPL IC AT IONS BUSINE S S GROUP, OR ACL E

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